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Court of federal claims rules U.S. may avoid damages over breach of radioactive waste contract

The Federal Claims Court has ruled that the United States might avoid damages, but not liability, by arguing that unavoidable delay caused the government to breach a contract to dispose of high-level radioactive waste. Rochester Gas & Elec. Corp. v. United States, No. 04-118C (Fed. Cl. 7/29/11). The lawsuit is one of several filed against the U.S. Department of Energy (DOE ) over a plan for the Nuclear Regulatory Commission (NRC ) to accept and dispose of utilities’ spent nuclear fuel in exchange for fees that utilities paid into a nuclear waste fund. The plan was never implemented because of delays in establishing a nuclear waste repository and DOE ’s decision not to go forward with plans to establish such a repository at Yucca Mountain in Nevada.

Plaintiff apparently alleged that in January 2004, when the lawsuit was filed, it had contributed more than $67.9 million to the nuclear waste fund and continued to pay $3.5 million more in fees each year.

Defendant pointed to a clause in the government’s standard contract with nuclear power companies releasing the government from liability for damages if it fails to collect and dispose of the nuclear waste because of acts of God, acts of government, fires, floods, or other events. According to the court, under controlling precedent from the Federal and D.C. Circuits, the government may assert the unavoidable delay clause in the contract as a defense to a demand for damages, but not as a defense to liability for breach of contract. The court granted, in part, defendant’s motion to file an amended answer and affirmative defense.